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Exhibit 4.13

Principles of
Cooperation

Between Matrix IT Ltd.
(Matrix) and BluePhoenix Solutions Ltd. (BluePhoenix), dated
August 8,  2006.

| | A. | Allocation
of Human Resources
| | -- | -----------------------------

| | 1. | The
parties hereto, BluePhoenix and Matrix (the Companies) shall
                    order, from time to time, services from each other. Each party shall
provide the                     services ordered by the other party, as aforesaid,
performed by such                     partys employees, all under the terms set
forth herein.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 2. | The
parties shall execute a purchase order for each employee to provide services
                    as aforementioned, and each purchase order shall include the
following terms:                     term of services, availability of the employee,
terms of payment and rates.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3. | Each
party may terminate the services provided by the other partys
                    employee by a two weeks advance notice.
| | -- | -------------------------------------------------------------------------------------------------------------------------------

| | 4. | As
long as an employee is employed by a party or a related company thereof, such
                    party may not transfer an employee providing services hereunder from
its                     assignment for the other party.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 5. | A
Partys employee performing services hereunder for the other party may be
                    recruited by the other party purchasing such services, after a period
of                     provision of services of no less than 12 months.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 6. | A
party shall remain employer of its employee performing services hereunder for
                    the other party during the entire term of provision of services
hereunder, and                     shall remain liable for all such employees
rights.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 7. | Fees
shall be paid against an invoice, 60 days following the end of the month in
                    which the invoice was issued. Payments shall be made in NIS, unless
otherwise                     agreed by both parties. Daily rates for each employee are
set froth in Exhibit A                     attached hereto. For services rendered abroad,
the daily rate shall be in the                     range of $280 to $365 (and
approximately 50% for a day flight). The                     specific rate and terms for
each employee shall be agreed upon by the parties in                     the respective
purchase order executed by the parties.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | B. | Cooperation
in performing projects
| | -- | ----------------------------------

| | The
agreed upon principles for cooperation in the sale process and performance of projects for
prospects of either party (the Customers) for performance of conversion
projects (the Projects) are as follows:
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 1. | A
party wishes to cooperate with the other party will provide the other party
               the required information related to performing the project in hand.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 2. | The
project shall be performed and managed by the party assigned as the prime
               contractor. The prime contractor may assign to the other party, acting as
a                subcontractor, parts of the project which were examined and found to be
fitted                to the scope of the agreement, providing that the subcontractor
posses the                technological knowledge for performing the relevant components
in projects of                this type.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | 3. | A
proposal to the Customer shall be submitted by the prime contractor. The
               subcontractor shall sign a back-to-back agreement to the agreement between
the                prime contractor and the Customer with respect to the components to be
performed                by the subcontractor, subject to the subcontractors
examination of, and                consent to, the terms of the agreement and changes
thereto. Each party shall                perform its obligations towards the Customer and
shall act for completing the                project phases on their due dates and shall
refrain from acts or omissions which                shall cause the Customer to withhold
payments. Parts of the main agreement                between the prime contractor and the
customer, which are relevant to the                subcontractors components, shall
be provided to the subcontractor and                shall be subject to its prior
approval.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4. | The
subcontractor shall provide the prime contractor, in advance, a quote for
               its components of the Project. At the prime contractors election,
the                subcontractors proposal shall be incorporated in the proposal
submitted by                the prime contractor or shall be submitted as part of a joint
proposal submitted                to the Customer by both parties.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 5. | In
the event that it is agreed by the parties with respect to a certain Project
               that a party shall provide services to the other party on a time and
material                basis, the rates shall be as set froth in Exhibit A attached
hereto.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 6. | Consideration.
The prime contractors margins for the components                performed by the
subcontractor shall not be greater than 15% of the prices                charged by the
subcontractor. Payments shall be made proportionately to the                payments
actually collected from the Customer for such components. Prime                contractor
shall provide the subcontractor information related to invoices                issued to
the Customer and payments made by the Customer. The prime contractor                shall
act for the purpose of collecting payment from the Customer and shall
               endeavor to collect any payment due to it as prime contractor when it
becomes                due. Prime contractor shall pay subcontractor 3 business days
after collection                of the respective payment from the Customer.
Notwithstanding the foregoing, in                the event that Customer does not remit
payment because of an act or omission of                the prime contractor, the prime
contractor shall be held responsible for payment                to the subcontractor.
Notwithstanding the foregoing, in the event that the                subcontractors
components are less than 50% of the whole Project, the                prime contractor
shall not be bound by the restrictions mentioned above with                respect to
maximum margins charged by it.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 7. | The
parties shall execute a mutual non disclosure agreement.
| | -- | ------------------------------------------------------------

| | 8. | It
is hereby clarified that consent for a specific cooperation between the
               parties shall be subject to a specific mutual agreement of both parties,
reduced                to writing and signed by them with respect to each
Project/Customer.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 9. | Immediately
after the prime contractor discloses to the subcontractor the                identity of
a Customer for purpose of cooperation under this agreement, the                following
terms shall apply: each of BluePhoenix and Matrix undertakes that they
               will not approach the Customer, independently or together with a third
party, in                connection with the Project. However, if a party or a controlled
subsidiary                thereof, has an earlier business relation with such Customer,
such party shall                not be subject to this Agreement, and the parties shall
renegotiate terms of                agreement between them.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | 10. | As
long as a Project was not awarded to the prime contractor, this agreement
               shall remain in force for a period of 3 months from the date of signing a
               specific agreement by the parties in connection with such Project, unless
such                term was extended by the parties.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
parties hereof hereby agree to the principles of cooperation set forth herein:
| | ----------------------------------------------------------------------------------

| | 
BluePhoenix Solutions Ltd. | 
Matrix IT Ltd.
| | ----------------------------------------- | -----------------------------



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